LETTER AGREEMENT
LETTER
AGREEMENT
December
12, 2008
00 Xxxxx
Xxxxxxxx, Xxxxx 000
Xxxxx
Xxxxxx, XX 00000
Attention: CEO
Ladies
and Gentlemen:
Reference
is made to (i) the Securities Purchase Agreement dated as of May 28, 2008
between Pervasip Corp. (the “Company”), LV Administrative
Services, Inc. (the “Agent”), and the Purchasers
from time to time party thereto, including Valens Offshore SPV I, Ltd. (“Valens Offshore”)
(collectively, the “Purchasers” and together with
the Agent, the “Creditor
Parties”) (as amended, restated, modified and/or supplemented from time
to time, the “Purchase
Agreement”), (ii) the Amended and Restated Secured Term Note effective as
of October 15, 2008 made by the Company in favor of Valens Offshore (as amended,
restated, modified and/or supplemented from time to time, the “Second Term Note”), (iii) the
Amended and Restated Master Security Agreement dated as of November 1, 2008 from
the Company, certain Subsidiaries of the Company in favor of the Agent (as
amended, restated, modified and/or supplemented from time to time, the “Master Security Agreement”),
(iv) the Stock Pledge Agreement dated May 28, 2008 by and among the Company,
certain Subsidiaries of the Company and Agent (as amended, restated, modified
and/or supplemented from time to time, the “Stock Pledge Agreement”),(v)
the Subsidiary Guaranty dated May 28, 2008 by certain Subsidiaries in favor of
the Company (as amended, restated, modified and/or supplemented from time to
time, the “Subsidiary
Guaranty”), and (vi) the Amended and Restated Restricted Account Side
Letter dated as of October 27, 2008 between the Agent, Valens Offshore and the
Company (as amended, restated, modified and/or supplemented from time to time,
the “Restricted Account Side
Letter” and together with the Purchase Agreement, the Second Term Note,
the Master Security Agreement, the Stock Pledge Agreement, the Restricted
Account Side Letter and the Related Agreements referred to in the Purchase
Agreement, the “Existing
Agreements”). Capitalized terms used herein that are not
defined shall have the meanings given to them in the Existing Agreements, as
applicable.
The
Company and the Creditor Parties have agreed to make certain changes to the
Purchase Agreement.
In
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
(a) Subject to
satisfaction of the conditions precedent set forth below, the Purchase Agreement
is hereby amended as follows:
(i) Section 1(b)
of the Purchase Agreement is hereby amended by deleting the phrase “FIVE HUNDRED
THOUSAND DOLLARS ($500,000)” and inserting “ONE MILLION ONE HUNDRED THOUSAND
DOLLARS ($1,100,000)” in lieu thereof.
(ii) All
references to the term “Second Term Note” as set forth in the Purchase Agreement
shall hereafter be deemed to refer to the Second Amended and Restated Secured
Term Note (as defined below).
(b) The Second
Term Note is hereby amended and restated in the form attached hereto as Exhibit A (the “Second Amended and Restated Secured Term
Note”). For the avoidance of doubt, the amendment and
restatement of the Second Term Note as set forth in this clause (b) shall be in
substitution for and not in satisfaction of the Second Term Note.
(c) The
Restricted Account Side Letter is hereby amended and restated in the form
attached hereto as Exhibit B (the “Second Amended and Restated Side
Letter”).
(d) To induce the
Creditor Parties to, among other things, agree to the amendments set forth above
and for Valens Offshore I to provide additional financial accommodations to the
Company as evidenced by the Second Amended and Restated Secured Term Note, each
of the undersigned (other than the Creditor Parties):
(i) acknowledges,
ratifies and confirms that all of the terms, conditions, representations and
covenants contained in the Existing Agreements to which it is a party are in
full force and effect and shall remain in full force and effect after giving
effect to the execution and effectiveness of this letter agreement and all of
the instruments, documents and agreements contemplated hereby, including without
limitation, the Second Amended and Restated Secured Term Note, the Second
Amended and Restated Side Letter and the documents, instruments and agreements
entered into in connection therewith (collectively, the “New Agreements”);
(ii) acknowledges,
ratifies and confirms that the defined term “Obligations” under (i) the Master
Security Agreement, (ii) the Stock Pledge Agreement and (iii) the Subsidiary
Guaranty, include, without limitation, all obligations and liabilities of the
Company and the Subsidiaries under the New Agreements;
(iii) acknowledges,
ratifies and confirms that the defined term “Documents” under, and as defined
in, each of the Master Security Agreement, the Stock Pledge Agreement and the
Subsidiary Guaranty, include, without limitation, all obligations and
liabilities of the Company and the Subsidiaries under the New
Agreements.
(iv) acknowledges
and confirms that (A) the occurrence of a breach and/or an Event of Default
under any of the New Agreements shall constitute a breach and/or an Event of
Default under each of the Existing Agreements and (B) the occurrence of a breach
and/or an Event of Default under any of the Existing Agreements shall constitute
a breach and/or an Event of Default under the New Agreements;
(v) represents
and warrants that no offsets, counterclaims or defenses exist as of the date
hereof with respect to the undersigned’s obligations under the Existing
Agreements to which they are a party;
(vi) acknowledges,
ratifies and confirms the grant by the Company and the Subsidiaries to the
Creditor Parties of a security interest in the assets of (including the equity
interest owned by) each of the Company and the Subsidiaries, as more
specifically set forth in the Existing Agreements.
(vii) represents
and warrants that (A) all of the representations made by or on behalf of the
undersigned in the Existing Agreements to which it is a party are true and
correct in all material respects on and as of the date hereof; (B) each of the
undersigned has the corporate power and authority to execute and deliver the New
Agreements to which it is a party; (iii) all corporate action on the part of
each of the undersigned (including their respective officers and directors)
necessary for the authorization of the New Agreements, the performance of all
obligations of the undersigned hereunder and thereunder and, the authorization,
sale, issuance and delivery of the Second Term Note has been taken; and (iv) the
New Agreements, when executed and delivered and, to the extent it is a party
thereto, will be valid and binding obligations of the undersigned;
and
(viii) releases,
remises, acquits and forever discharges each Creditor Party and their respective
employees, agents, representatives, consultants, attorneys, fiduciaries,
officers, directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations, and related corporate divisions (all of the
foregoing hereinafter called the “Released Parties”),
from any and all actions and causes of action, judgments, executions, suits,
debts, claims, demands, liabilities, obligations, damages and expenses of any
and every character, known or unknown, direct and/or indirect, at law or in
equity, of whatsoever kind or nature, for or because of any matter or things
done, omitted or suffered to be done by any of the Released Parties prior to and
including the date of execution hereof, and in any way directly or indirectly
arising out of or in any way connected to this letter agreement, the Existing
Agreements, the New Agreements and any other document, instrument or agreement
made by the undersigned in favor of the Creditor Parties.
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(e) This letter agreement
shall become effective upon satisfaction of the following conditions
precedent: (i) such certificates, instruments, documents, agreements
and opinions of counsel as may be required by the Creditor Parties, each of
which shall be in form and substance satisfactory to the Creditor Parties, (ii)
the Company shall have reimbursed the Creditor Parties for the full amount of
all of the Creditor Parties attorneys’ fees and costs incurred in connection
with the preparation and negotiation of the letter agreement and each of the
other New Agreements and in connection with the closing of the transactions
described herein and therein.
(f) In
consideration of the above, the Company shall pay to Valens Capital Management,
LLC, the investment manager of Valens Offshore I (“VCM”), a
non-refundable payment in an amount equal to $9,000.00 (the “VCM
Payment”). The VCM Payment shall be deemed fully earned on the date
hereof and shall not be subject to rebate or proration for any
reason.
(g) The Company
further agrees to pay an amount equal to $12,000 to Valens Offshore I (the
“Valens Offshore I Payment”). The parties hereto agree that the fair
market value of the Valens Offshore I Payment (as reasonably determined by the
parties) is hereby designated as additional interest. The parties
agree to file all applicable tax returns in accordance with such
characterization and shall not take a position on any tax return or in any
judicial or administrative proceeding that is inconsistent with such
characterization. Notwithstanding the foregoing, nothing contained in
this paragraph shall or shall be deemed to impair in any manner whatsoever the
Company’s obligations from time to time owing to Valens Offshore I under the New
Agreements.
The
payments set forth in sections (f) and (g) above shall be paid at closing out of
funds held pursuant to a funds escrow agreement for the purchase of the Second
Term Note and a disbursement letter executed in connection
herewith.
(h) Nothing
contained herein shall (i) limit in any manner whatsoever the Company’s, each
Subsidiary and each other Person’s obligation to comply with, and the Creditor
Parties right to insist on the Company’s, the Subsidiaries and such other
Person’s compliance with, each and every term of the Existing Agreements, or
(ii) constitute a waiver of any Event of Default or any right or remedy
available to any of the Creditor Parties, or of the Company’s, the Subsidiaries
or any other Person’s obligation to pay and perform all of its obligations, in
each case whether arising under the Existing Agreements, applicable law and/or
in equity, all of which rights and remedies howsoever arising are hereby
expressly reserved, are not waived and may be exercised by any of the Creditor
Parties at any time.
(i) The Company
acknowledges that it has an affirmative obligation to make prompt public
disclosure of material agreements and material amendments to the Existing
Agreements. The Company intends to file a Form 8-K with respect to
the transactions contemplated by this letter agreement no later than four (4)
Business Days following the date hereof, a copy of which shall be delivered to
the Creditor Parties.
(j) Except as
specifically amended herein, the Existing Agreements shall remain in full force
and effect, and are hereby ratified and confirmed. The execution,
delivery and effectiveness of this letter agreement shall not operate as a
waiver of any right, power or remedy of any of the Creditor Parties, nor
constitute a waiver of any provision of any of the Existing
Agreements. This letter agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
(k) This letter
agreement may be executed by the parties hereto in one or more counterparts,
each of which shall be deemed an original and all of which when taken together
shall constitute one and the same agreement. Any signature delivered
by a party by facsimile transmission shall be deemed to be an original signature
hereto.
(l) This letter
agreement is consented and agreed to by Valens Offshore SPV II, Corp. the
Company and certain Subsidiaries of the Company.
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Very
truly yours,
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VALENS
OFFSHORE SPV I, LTD.
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By:
Valens Capital Management, LLC, its investment manager
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By:
/s/ Xxx
Xxxxx
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Name:
Xxx
Xxxxx
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Title:
Authorized Signatory
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LV
ADMINISTRATIVE SERVICES, INC.
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as
Agent
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By:
/s/ Xxx
Xxxxx
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Name:
Xxx
Xxxxx
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Title:
Authorized
Signatory
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CONSENTED
AND AGREED TO:
(f/k/a
eLEC Communications Corp.)
By: /s/ Xxxx X Xxxx
Name:
Xxxx X. Xxxx
Title:
CEO
VOX
COMMUNICATIONS CORP.
By:
/s/ Xxxx X Xxxx
Name:
Xxxx X. Xxxx
Title:
CEO
AVI
HOLDING CORP.
By:
/s/ Xxxx X Xxxx
Name:
Xxxx X. Xxxx
Title:
CEO
XXXXXXXXXXXXX.XXX
CORP.
By:
/s/ Xxxx X Xxxx
Name:
Xxxx X. Xxxx
Title:
CEO
LINE ONE,
INC.
By:
/s/ Xxxx X Xxxx
Name:
Xxxx X. Xxxx
Title:
CEO
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